The Bottom Line: The largest 50 sustainable funds represent a good starting point for identifying and evaluating candidates for a diversified investment portfolio’s core positions.
The largest 50 sustainable investment funds represent a good starting point for identifying and evaluating core candidates for building a diversified sustainable investment portfolio
The largest 50 sustainable investment funds, with $224 billion in assets under management as of April 30, 2024, are managed by 22 different investment firms. The largest funds make up 67% of the assets sourced to focused sustainable mutual funds and ETFs whose net assets stood at $333.4 billion as of the same date The funds that comprise the segment range in size from $1.3 billion to $28.5 billion in assets, including all related share classes in the case of mutual funds. While the largest funds may not span the variety of investment options that are available across the entire universe of focused sustainable funds, they do represent a good starting point for identifying and evaluation potential candidate funds for consideration in building the core segment of a diversified sustainable investment portfolio. Such offerings include large cap and small cap blended funds, foreign as well as emerging market funds, intermediate investment-grade bond funds and short-term bond funds.
Actively managed funds as well as equity funds dominate the largest 50 funds list
Actively managed funds dominate, accounting for $127.7 billion or 57% of the segment’s total net assets. The segment is also overshadowed by equity funds that make up just over 95% of assets. The list of the largest funds includes only seven fixed income funds with a combined total of almost $10 billion in net assets distributed cross four fund categories. The largest funds are stratified into nineteen investment categories, but four categories dominate. These include Large Blend (52%), Large Growth (11%), Foreign Large Blend (7%) and Intermediate Core Bond (6%). Together, these four categories account for almost 76% of net assets.
The largest 50 funds recorded an average return of 14% over the trailing twelve months
Based on the performance of the ETFs and largest share class in the case of mutual funds, the 50 funds posted an average return of 14% over the trailing 12 months, keeping in mind that the segment straddles 19 investment categories with varying results. The worst performing category, populated by just one fund, recorded a negative return of 28.2% sourced to the $2.2 billion iShares Global Clean Energy ETF. Clean energy stocks have been buffeted, in part, by higher interest rates and inflation. At the other end of the range, Large Growth funds were up an average 24.3%.
Investors in the largest funds are subject to an average expense ratio of 50 basis points, but the range runs from just 0.1% applicable to the SPDR S&P 500 ESG ETF to 1.31% levied by the Eventide Health and Life Sciences Fund I.
Notes of Explanation: Performance reflects total return posted by the largest share class in the case of mutual funds with multiple share classes. $AUM in millions combines all share classes where applicable. Sources: Morningstar Direct; Sustainable Research and Analysis LLC.
